S. Korea’s future competitiveness depends on follow-up agreement of LG-SK battery disputes

The United States International Trade Commission on Wednesday (local time) sided with LG Energy Solution, which accused its rival SK Innovation of misappropriating trade secrets related to electric vehicle (EV) battery technology. The ITC issued a 10-year ban on battery production within the U.S. and their imports into the country by SK Innovation. Unless U.S. President Joe Biden vetoes the ruling within 60 days to review the ITC's ruling, it immediately takes effect.

The cases in which a U.S. president vetoed the ITC’s ruling are very rare. Therefore, it is garnering attention in the related industry whether the two South Korean companies will reach an agreement in the next 60 days, especially because the recent ruling has broad implications and the battery industry has significance to South Korea’s future economy.

The global EV battery market is expected to reach 215 trillion won in 2030. South Korea’s three leading companies – LG Energy Solution, SK Innovation, and Samsung SDI – are highly competitive, accounting for 34.7 percent in the global market last year. In particular, LG Energy Solution, which is competing with China’s CATL for the largest market share, has the level of technology that is considered No. 1 in the world. SK Innovation is also trying to become one of the global leading companies by building plants in Seosan, South Chungcheong Province and Georgia, the U.S. However, Chinese and Japanese companies are also trying to expand their market shares and the European Battery Alliance has begun supplying batteries to the local markets.

The disputes between LG Energy Solution and SK Innovation are complicatedly related to the interests of U.S. state governments and the supply chain issues of automotive manufacturers, such as Volkswagen, Ford, and Kia. If the disputes become a competition of pride with no practical interest, only foreign companies will benefit from them. Such a worst-case should be avoided under any circumstances.

There were foreign cases where global companies of the same origin had disputes. When it comes to major issues that way the future of a country, however, it is common that competition in good faith is pursued while strategic partnership or agreement is reached in consideration of national interests. LG and SK should recognize that the recent disputes will go beyond a matter between the two, heavily affecting the overall industrial competitiveness in the future. What’s most important is to open a communication channel that allows a free exchange of honest opinions with practical decision-making rights. A reasonable win-win solution for both parties can be found only in honest conversations.